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Why don’t greedy companies pay their employees higher salaries?

Today we are going to discuss the issue of “why don’t greedy companies pay their employees higher salaries?” I have been hearing this a lot lately, both in my personal interactions and in the media. So, bear with me why I try to explain this issue in the simplest terms possible. I am struck that surprisingly few people understand the basics of how businesses work, so I will be trying to do a little educatin’.

I have started several small businesses. I have also worked in a corporation where I had to hire and fire people. So, I have first-hand knowledge of how small businesses work and how large corporations work.

Again, bear with me, but I think we need to first define what a job is. A job involves one person renting out his time and experience to another person or group of people. It is a voluntary transaction that is mutually beneficial. So, if you have a job where you work 40 hours a week and make $40k per year, you have made a voluntary decision that it is worth trading your time, which is valuable, for money, which is also valuable.

Let me emphasize the voluntary nature of this transaction. Unless you are a slave (in which case send me an email so I can find a way to help you), you have voluntarily decided that at the time you took the job it was the best thing available. You have free will. When you took the job, you could have decided to take another job, start your own business or not work at all. Nobody forced you to take that job (again, unless you are a slave).

The same principle applies to the poor people working at McDonald’s making $7.25/hour. At the time they took the job, that was the best thing they had available. Of all of their possible life-choices, that minimum wage job at McDonald’s was the best one.

So, why does McDonald’s pay such a low wage? People can’t live on $7.25/hour, right?

Well, the first point is that many people at McDonald’s are in high school or college or are just starting out their careers. So, relatively few of them are actually “living on” $7.25/hour. Many of them probably still live at home or in dorms rooms. They are doing what all employees are doing. They are renting their time (which is valuable but less valuable because they have relatively few skills) for money, which is also valuable.

But let’s say that there is an employee at McDonald’s who is trying to maintain a family on his own. How is it “fair” that he or she is making so little money?

The first point to understand is that most McDonald’s are franchises. This means they are actually not owned by the huge corporation McDonald’s but instead are owned by small business people. What they do is they pay McDonalds a franchise fee and either buy an existing McDonalds or build a new one. The McDonalds corporation charges a monthly fee to these franchise owners.

Starting a McDonald’s franchise is expensive. A good rule of thumb is that you probably want to have at least $100k cash to start the business, and perhaps a lot more if you are building a new McDonalds. And there is no guarantee you will be successful. As anybody who has driven around town knows, there are all kinds of fast-food competitors. As anybody who has started a business knows, you could spend money opening the restaurant and not be successful and lose all of your money.

So, the franchise owners expect a return on their investment. They didn’t invest $100k so they could spend the rest of their lives making $20k/year. They invested the money (and took the risk) so they could make a good living.

Each McDonalds employs dozens of people. Labor cost is your biggest expense. You pay what the market will bear. If you can’t hire good people at $7.25/hour, you may need to pay $9/hour or more.

True story: during the 1980s economic boom I spent a summer in Massachusetts working for the Boston Globe as a business reporter. This was the summer of 1984, and Massachusetts was going through a golden period. There was virtually no unemployment, and McDonalds franchise owners were having problems hiring people. They used to advertise starting salaries to get employees. When I got to Boston in June, they were advertising $6/hour, but by the time I left in August the pay was up to $7 or $8/hour. This is probably the equivalent of $16/hour or more today. The owners were desperate for employees and were in a bidding war to get people to work. But note: a hamburger in Boston in 1984 cost a lot more than a hamburger someplace where the labor market was not so tight. All fast food restaurants had to raise their prices to make up for the higher pay for the employees.

So, why do people work at $7.25/hour at McDonalds today? Because the economy stinks. It may be the only job available.

Point number one: if you want McDonalds to pay more money, you need to favor policies that will cause unemployment to go down so franchise owners will be forced to pay more.

Point number two: franchise owners are simply business people trying to run the business the best they can. They might bring in $1 million per year for their restaurant, but again they have to pay some of their monthly profits to McDonald’s, they they have to pay for maintenance of the building, then they have to pay for the products, etc. And of course they must pay for their employees. They have a manager and several assistant managers. They are constantly worried about their property being stolen by unscrupulous employees. Most franchise owners work in their restaurants, often 12 hours/day.

These hard-working franchise owners are not millionaires (for the most part). They constantly fear competition. They are worried that people will prefer Burger King or Wendy’s or In N Out (my personal favorite).

Could these franchise owners pay their employees more? Sometimes yes, but again you need to consider the fact that many of them took out loans to come up with the $100k franchise fee. If they don’t pay their loans, they will lose their business. In addition, franchise owners have their own families and their own bills to pay.

So, let’s say a kind-hearted franchise owner pays his employees $15/hour because he believes nobody can live on $7.25/hour. There are probably some franchise owners who do this, but most of them don’t. He may think it is a wise business decision: perhaps you get better, more productive employees who don’t steal as much.

But let’s say all of the other fast food restaurants in town keep wages low. What happens when the economy goes south? What happens when people stop eating at McDonald’s and start eating at In N Out? The franchise owner must either 1)fire people 2)cut wages or 3)go out of business.

The reality is that small business people who stay in business are always worried about such eventualities. It simply does not make sense to pay people much more than what the market will bear. You are taking a risk that you may lose your business and all of the money and time that you have invested.

Point number three: paying what the market will bear is a prudent move for business owners if they want to stay in business long-term. It may seem “mean” to pay such low wages, but the reality is that in a competitive marketplace it may be the only way you can stay in business.

And lastly, point number four as a reminder: the employee agreed to take the job because it was the best thing available at the time. If the employee does not like the job or the conditions, he has two choices: 1)ask for more money or better working conditions or 2)find another job. Remember, this employee is part of a voluntary transaction where he is renting his or her time and skills for money. Note the word “voluntary.” Nobody owes you a job.

One last point: in this environment, it is easy to see why minimum wage laws are extremely foolish. The franchise owners are working with very small margins. They have XX amount to spend on salaries, and they will not spend more. So, if you can employ 50 people at 7.25 /hour and the government says you must pay $10/hour, what do businesspeople do? They fire people. Minimum wage laws cause higher unemployment, hurting the people they are intended to help.

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About Geoff B.

Geoff B graduated from Stanford University (class of 1985) and worked in journalism for several years until about 1992, when he took up his second career in telecommunications sales. He has held many callings in the Church, but his favorite calling is father and husband. Geoff is active in martial arts and loves hiking and skiing. Geoff has five children and lives in Colorado.

Suggestion to people who think the business owners are “mean” for paying low salaries: come up with $100k. Go buy a McDonalds’ franchise. Hire people at $15/hour when everybody else in town pays $7.25/hour. See how long you stay in business.

Oh my! Clapping my hands I love this post so much! Here in Santa Fe, they have a “living wage” law that sets the city min. wage at $10 an hour. Santa Fe has one of the highest unemployment rates in the state as a result.

And what you’ve explianed here is opportunity cost. Everything has a price — your time, buying that hamburger, the startup costs, the risks you take. There is no such thing as a free lunch! I think what many people don’t understand is that when governments force min wage laws they price the poorest and lowest skilled out of the job market. Why do you want to pay $10 an hour to a high schooler, with no skills for a job that is worth $5 an hour. You, as the business owner, probably will not, and that kid will not have the chance to work and build skills.

“If I, as an employer, in my policies and practices exploit my employees, I will either lose them and my business, or my employees will gather together and threaten to strike me. They will strive to exercise an influence on the legislative process so that laws will be enacted dictating fair employment policies and practices, thus limiting my freedom to determine these things for myself.”

“The Law of the Harvest: As a Man Sows, So Shall He Reap.” Elder Howard W. Hunter. BYU Devotional. March 8, 1966

Your point is well taken Geoff. In a capitalist system, a business always has to be about the bottom line, or it will get eaten by the sharks, and it won’t be able to hire anyone.

The socialist encroachments like the minimum wage, or health insurance mandates do not really change the fundamental capitalist structure of our system. They simply provide extra costs of doing business. But those costs are distributed (somewhat) equally, so collectively, the entire system will absorb those extra costs and continue to compete at the same level. All fast-food chains have to pay minimum wage, so that is part of the cost of fast food. No one can get it for cheaper elsewhere.

A big mac meal is $4.99. If the government raised the minimum wage by a dollar, the price of that meal would go up. But by how much? That is the important question. It’s obvious that raising the minimum wage causes inflation. But if the inflation is relatively small, then wage earners will get more money, and still have enough buying power to offset the costs of inflation, a win-win. If the inflation caused is too great, then it becomes the law of diminishing returns, because the value of the wage has shrunk.

We live in a society where median wages have been stagnant for decades, while inflation has steadily increased, and upper income wages have been skyrocketing. This is a problem worth addressing, not simply letting the market continue to promote inequalities.

And the minimum wage is a special case. These are the lowest earners, not median earners. These are the poor, the uneducated, those living hand to mouth just trying to survive with their limited mental and social skills. The minimum wage is in place, not because it is good for business, but because Jesus said “the poor you will always have among you.” There will always be poor people, foolish people, people who bury their talent. In my opinion, the minimum wage is the least we can do for these people, and while it might seem an onerous cost of doing business, I don’t want to go back to the industrial revolution days when we paid them 10 cents a day. Pure capitalism didn’t take care of those kinds of inequalities back then, and going back to pure capitalism today wouldn’t equalize things either.

Nobody owes you anything in life. I tire of people around the water fountain lamenting that they din’t win the lotto or get a raise. Working for the man is not the only thing to do. People now have the internet which potentially sets the world as your customer base. Get your ideas going and make your 1st million.

John F, wrong. Let’s consider the situation of the average person in, say, 1880, the “robber baron” period. What were there choices? Well, if they lived in Russia, serfdom for the most part. Same in China, India and much of the rest of the world. This is why people wanted to come to the United States, where they could be “exploited” by the robber barons (actually, the robber barons didn’t do that much exploiting of workers, despite their names , but that is a discussion for another time). In any case, why didn’t they stay in Russia, Ireland, Italy, etc? Well, there was more opportunity in the United States, especially for the poor. So, they made the decision that coming to the United States, where there was no minimum wage and no welfare state, provided more opportunity for them than staying where they lived. So, the truth is that this period was significantly better for the poor than their alternatives at the time.

And what about the world of Dickens? Well, clearly there was a lot of poverty. And working in a textile factory in the Midlands sure seems pretty dreary to us. But the reality is that the industrial revolution provided *better* conditions than slaving away on a farm all year long, which is why people took the jobs in the first place. And over time, conditions improved because workers started making more money and employers were forced to provide better conditions to keep their workers.

The true history is that the 19th century was a wonderful time for the poor, a time when the lifestyle of the average poor person improved at a breakneck pace, a time of incredible innovation and progress. Something to consider: would you rather have been a typical worker in 1880 or in 1780 or 1680? The truth is that, for the average worker, 1880 was significantly better. And the poor were the people who benefitted the most.

Bravo. It’s hard to have a grown-up discussion about this issue when the one asking the question in the first place has poisoned the pond with terms like “greedy companies” (or “corporate America” or “Wall Street”). Most businesses are none of the above, and–SPOILER ALERT–are just ordinary people who actually care about their employees. Any business owner (in virtually any kind of business) will know how thin profit margins are. You can only squeeze so much juice out of a lemon. It’s better for everyone to work on growing bigger lemons.

I don’t agree with your analysis of the plight of the poor and destitute in the nineteenth century. For one thing, there was no minimum wage in Russia or Ireland either. Serfs were essentially slaves. Coming to America represented the opportunity to one day possibly own some land, which was out of the question in Russia and Ireland. That they were them exploited by unscrupulous industrialists doesn’t establish that they were happy with their plight but they were better of because of the political freedoms that they obtainedbyemigrating. As the governmentslowly became less corrupt and tied to the industrialists, and began to address the awful exploitation through reasonable and necessary regulation, the descendants of these immigrants could finally move out of subsistence poverty and create an economic life for themselves.

John F, you are missing the point. Most people were poor in 1880. People who became less poor did so not because of the minimum wage (which did not exist until 1938 on a national level) but because they worked hard and either a)started their own businesses or b)kept a job and were promoted, etc. Again, the average worker’s salary skyrocketed without a minimum wage from the late 19th century until 1938. In the 1914, Henry Ford famously paid his workers $5/day, which is the equivalent of more than $150/day today, all without a minimum wage and without labor unions. Why? Because he had problems keeping good workers and it was necessary for his business. You can read more here: http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/

The “unscrupulous industrialists” you so easily malign were providing jobs to people who would not have had them otherwise. They were paying the prevailing wages at the time (or in the case of Ford, twice the prevailing wage). The people who got the jobs felt fortunate and certainly were better off than they had been in their home countries. Nobody was forcing them to take a job from Rockefeller, Ford or James J. Hill. They freely chose to work for them *because it was the best available opportunity at the time.*

Meanwhile, the purchasing power of the average American tripled from the 1880s to 1930 — all without a minimum wage and with no welfare state. Compared to our government-created malaise right now, that time was paradise.

Geoff, that time was not paradise except for a very few. It sounds like you’re painting it add s golden age that never was. I’m certainly grateful I live now and not then and that as a kid I went full time to public school and wasn’t slaving away 10 hours a day in a mine or factory for a crust of bread to enrich a yes unscrupulous industrialist (what else can you call such exploitation?).

John F, your comment is illogical and ahistorical. Nobody “slaved” for a crust of bread in 1880 because anybody forced them to. They chose to work for an industrialist because it was better than the other alternatives available. The “unscrupulous” industrialists were offering to pay them the prevailing wage, and they freely accepted (for the most part — there were people pressed into forced labor in those days just as there are today. I hope we can agree we are not talking about forced labor).

John F, you appear to be willing to judge and condemn everybody who doesn’t accept exactly your idea of what is and is not righteous. I find this kind of intolerance objectionable. I have a challenge for you: put your money where your mouth is. Give your salary to the paralegals and secretaries you work with. Make sure that they all make exactly as much money as you do. The fact that you went to law school and they did not is irrelevant. It is not fair that you earn more money than they do. I look forward to your confirmation that you have done this. Until then, stop lecturing the rest of the world on your supposed righteousness.

Cynthia L, if you would like to comment on this site, you will have to avoid the usual snarkiness and sarcasm and intolerance that appears to be the form of communication for modern-day liberals. Make an argument without lecturing, without sarcasm, without snakiness, without being intolerant of those who disagree with you. I know it is difficult, but I promise it will make you feel better.

As a college student I had to make my own way, my crappy minimum wage job is all I had to live on. So I got an Associate Degree in a field where I was supposed to earn $10 – $15/hour except employers did not want to pay that, just minimum wage because I live in a “right to work” state, which sucks. Also in the field that was supposed to pay great the business owners in a 30 mile radius would get together and set their prices and employee wages. I hated that field and went back where I was happier for the same wage. A very rich company I worked for paid females less than males regardless of experience and length of employment. This company would rather have a high employee turnover paying minimum wage than pay a higher wage to keep good employees such as myself. When this same company came into the small town where I now live they tried to lure employees away from other businesses but couldn’t because they were not paying enough.
My son has to live on a minimum wage job while going to college and it is very difficult and he has no health insurance and he has medical issues. We help as much as possible but I lost my job 7 years ago and can’t get hired, because where I live one has to know the right people to get hired.
I disagree with the logic of this article. Yes, some companies struggle but the majority have money to hire people and can afford to pay minimum wage.
IMO, the mess we are in today, and has happened in the past, is greed of companies, then they get MY tax money to bail them out, and I can’t get help.
Without minimum wage laws businesses would pay the lowest wage they can get away with. The majority of Wal-Mart employees are on government assistance because Wal-Mart. flush with money, doesn’t want to hire full time employees. This last recession has not taught these greedy jerks anything, except reinforce the government will help them at the expense of the middle class. Another thing, my parents were better off in the 1960’s and 1970’s than what I am with a Bachelor degree today. Wages HAVE NOT kept up with the cost of living (that greed thing again).

“IMO, the mess we are in today, and has happened in the past, is greed of companies, then they get MY tax money to bail them out, and I can’t get help.”

Agreed. No more bailouts. Ever.

“Without minimum wage laws businesses would pay the lowest wage they can get away with.”

Yes and no. Companies will always pay the lowest wage they “can get away with.” I described in this post a couple cases (Boston in 1984 and Ford in 1914) where companies had to pay high wages because they couldn’t find good employees without higher wages.

“Wages HAVE NOT kept up with the cost of living.”

Definitely true. Wages have not kept up with the cost of living for the last 40 years. Interestingly, wages far outpaced the cost of living from 1800 until 1970. What has changed? We abandoned the gold standard, we accepted “moderate” inflation (which affects the poor and working class worst of all) and we grew the size of government. The cause of our dilemma is too much government, not too little.

Fyi – you need 300k cash before loans to open a MCD franchise. Low profit, high volume business means you are extraordinarily exposed to demand shocks. I would not want to run a business requiring 1500 customers each and every day on average to be profitable. Of course quite a few people do run theses businesses so what do I know?

But the reason why so many franchise owners own multiple franchises is because they actually don’t make huge amounts of money from a single location…I’m thinking of the recent Denny’s guy who said many of his stores don’t make 100+k in profit.

I just think its strange that so many people would just assume their neighbor should pay more, raise prices, offer great benefits etc, as if their neighbor is a greedy idiot who hadn’t thought about that before.

The bottom line is, this country is 16trillion in debt, the economy is in shambles, and a large part of that is because so many of us presume that we can just spend money with no consequence.

Actually, you could make a strong case Walmart can pay people what it does (which in many instances actually reasonable at least in the case of my sister in law who happily got a job there) precisely because of excessive government welfare.

If the labor market could not survive on what Walmart pays, it would not, meaning Walmart would necessarily have to pay more. Welfare in some cases might drive the cost of labor down by enabling employees to accept lower paying jobs because the government picks up the difference.

The important thing we are missing here though is progression and growth. If we could theoretically pay a 50k salary to the guy whose job it is to place cans on a shelf, what does that do to the innovation economy? Incentives matter, and removing incentive for change and learning and growth, etc would rob that employee of a desire to move up the ladder.

You may laugh at this idea. You may find it crazy, but anyone who has run a business knows at some point, after early success, things start to stagnant and get comfortable. Comfortable sounds nice, but when you aren’t on your toes dreaming up the next big thing or productivity saving innovation, you end up with high fixed costs, lower sales.

Incentives matter, and when you can dream big and make big gains you see more innovation. When you have people comfortable with where they are you see less innovation at the margins. Not everyone is “driven” like Bill Gates, but I think its a positive thing to have millions of people striving to do better (through increasing value one way or another) rather than comfortably doing the same thing that worked well, and compensated well yesterday.

The fewer people we have in the modern economy who actually produce “stuff” and then have to find a way to sell it, the greater this misunderstanding will be.

I have no dislike for NGOs, government careers, and academics, etc but I do worry how many people are gravitating toward these “noble” fields while not realizing its the value producing profit sectors that makes these jobs possible in the first place.

Geoff says, “The problem with minimum wage is that it decreases employment, it hurts those you are trying to help.”

This is true, but only up to a certain point. We are dealing with complex economic ecosystems which work effectively according to bell-curves, not ideological talking points. We throw the baby out with the bathwater when we refuse to moderate the forces of capitalism by being dead-set against things like minimum wage, and corporate tax. All these things hurt business, yes, but they help poor people MORE than they hurt in the long run, but only up to a certain point. You have to find that point. Minimum wage can’t be too low, and it can’t be too high.

Geoff, If I’m following you, you believe that it is logically impossible for an employer to oppress the hireling in his wages, that if one tried he soon would have no employees and no longer be an employer, so such a thing as an employer who oppresses hirelings in their wages has as much chance of actually existing as an ingot of Lawrencium.

John M, I don’t use the word “oppress,” you will notice. I don’t accept that paradigm. Slave owners oppressed their slaves, yes. Using the word “oppress” when dealing with voluntary transactions is inaccurate.

Let’s try a logical argument. Let’s say you are buying a new house. It is a difficult marketplace and you are willing to pay $250k for the house, which you are told is the fair market price in the area. But the owners have gone bankrupt and are selling the house in a short sale, and you buy the house for $180k. Have you “oppressed” the former owners?

Another example. Let’s say you are a McDonald’s franchise owner. A guy comes to you who is overqualified. All you have are minimum wage jobs. You tell the guy, “look, I’m sorry, all I can afford to pay you is $7.25/hour.” The guy says: “please, give me the job. I am desperate. I haven’t had a job in a year, and I will take anything.” You hire him for $7.25/hour. Have you “oppressed” him?

I used the the word oppress because that is the word used in the King James translation of Malachi, where that prophet speaks of “those that oppress the hireling in his wages.” Hirelings with wages, not slaves.

There is, of course, a pretty easy solution for those people who condemn others for “oppressing” their employees: go to your local McDonalds and start handing out money to the oppressed employees there. Then go to Burger King, then Wendy’s, then Wal Mart and on and on. Then, when you get back to your office find anybody in your office who makes less money than you and write them a check and continue to do so every month for the rest of your life. Put your money where your mouth is. It is the easiest thing in the world to be “righteous” from afar and judge other people without standing in their shoes.

“This is true, but only up to a certain point. We are dealing with complex economic ecosystems which work effectively according to bell-curves, not ideological talking points.”

Actually, Nate, economics works according to human common sense principles, not Keynesian sophisms. You need to read some Rothbard and von Mises. They have totally demolished the notion that you need any form of minimum wage controls.

A minimum wage is a price control. Price controls cause profound shortages. This is an economic fact– it happens every time governments step in and force gas stations to lower their prices during a crisis or hurricane. What ends up happening is that the gas runs out because the prices are so low. Now there is no more gas. Happens every time we impose a price control.

John M, good point, especially when it appears a preferred Hebrew translation of Malachi 3:5 for “oppressed” is “defraud.” I think we can agree that it is always wrong to promise to pay somebody $7.25/hour and only pay them $5/hour. That is definitely oppression, and I would always be against it. But note that is not a voluntary transaction. That is fraud. It is not “oppression” or “fraud” when an employer promises to pay you $7.25 and you accept it, and the employer pays you $7.25.

Here is how the NIV translates (in more modern language) Malachi 3:5: “5 “So I will come to put you on trial. I will be quick to testify against sorcerers, adulterers and perjurers, against those who defraud laborers of their wages, who oppress the widows and the fatherless, and deprive the foreigners among you of justice, but do not fear me,” says the Lord Almighty.”

Geoff – I saw your comment to John F. You do realize that he (John) works for the public interest now and probably makes less than most law firm secretaries do, right? I doubt he even has any paralegals or secretaries to help him. Off topic, I know, but no more than your calling it out in the first place, and just thought you ought to know. I doubt he would say anything about it, but I can!

Jordan F, I did not know that. Good for him, if that is what he wants to do. My point still remains the same, which is that it is quite easy for people to go around claiming that other people are unrighteous. I find such intolerance absolutely appalling and uncharitable. As Elder Uchtdorf would say: “stop it!”

I think a lot of employer bashing has to do with the blame game. When unpleasant things happen people want to be able to pin guilt on someone, preferably not themselves. Blaming yourself for your own problems is depressing. Admitting that some problems are nobody’s fault is unsatisfying.

Stuck with a low paying job because you made poor decisions about what skills and education to pursue? Blaming yourself for your lack of foresight is no fun, let’s blame it on your employer for not paying you what you believe you’re truly worth.

Have a dead end job because bad luck and coincidences have made you desperate or left you nearly unemployable? Maybe you’re chronically sick, or struggling with mental illness or have the bad luck to be hit by the recession harder than most. Accepting that these bad things sometimes happen for no reason leaves you with a lot of built up anger and nowhere to aim it. Much more cathartic to blame your bad situation on the employer behind the bad job you’re stuck in.

Basically people like blaming authority figures for their problems, regardless of whether the authority figure is actually to blame. And since employers are the most common and immediate authority figure in the life of the modern man it’s not surprising they get so much anger and political pressure dumped on them. Even if everyone perfectly understood the logic of your article there would still be a huge emotional draw to blaming it on the boss.

John F, you know very well that it is not Elder Hunter’s quotation that I have a problem with. It is your interpretation, that people who do not agree with you are somehow unrighteous.

Elder Hunter’s talk must be taken in context. I note that you conveniently ignore the portions that contradict your own ideology, such as this:

“Last week you were given a great message by Elder Marion G. Romney which was inspiring and profound. He compared socialism with the United Order. I encourage you to study carefully that message. He gave much of the basic theory, the principles, the similarities and the differences between these two basically conflicting systems. As I accept his premises, logic, and conclusions, with your permission, at this time, I would like to use his message as a springboard for my own. The basic principle in his message is the same principle in mine, as already discussed – the principle of the Law of the Harvest – As a Man Sows, So Shall He Reap.

From my own experience in business and as a lawyer and church worker, and from my firsthand observations in this country and other countries of the world, there appears to me to be a trend to shift responsibility for life and its processes from the individual to the state. In this shift there is a basic violation of the Law of the Harvest, or the law of justice. The attitude of “something for nothing” is encouraged. The government is often looked to as the source of wealth. There is the feeling that the government should step in and take care of one’s needs, one’s emergencies, and one’s future.”

and this:

“The right to own and control private property is not only a human right; it is a divine right. We will largely be judged, if I understand the Savior’s teachings correctly (see Matthew 25), by how we use our property voluntarily for the blessings and benefit of our Father’s other children. President McKay continually teaches us that this right of free agency is our most precious heritage. It is our greatest gift in this world and is to be valued even more than life itself.

If you deprive a man of his right to fail in the righteous use of his property, you also deprive him of his right to succeed. If you remove from a man his right to “go to hell,” you likewise remove his free agency to go to heaven. Satan’s entire philosphy is based on a “something for nothing” philosophy: salvation without effort – a free gift. This counterfeit doctrine was rejected by God our Father. Our Elder Brother, Jesus Christ, accepted our Father’s plan and agreed to pay the infinite price to become our Savior and Redeemer and to show us the way back to the Father. The way is often the hard way. It is the Law of the Harvest. It is the same basic law in the spiritual realm which the farmer must obey in the physical realm. He plants in the spring and cultivates, waters, weeds, and nourishes the ground and its new life and then harvests in the fall.”

and then this:

“Under a free enterprise economy, little more than 6 percent of the population has produced nearly half of the world’s goods. We can today best wage a war on poverty by working on the roots of prosperity, not by sapping their vital strength. To sap the self-reliant spirit of enterprising independent souls in the development of a welfare state can bring only “poverty equally divided.” When the responsibility for their own welfare is completely shifted from the shoulders of individuals and families to the state, a lethal blow is struck at both the roots of our prosperity and our moral growth.

What is the real cause of this trend toward the welfare state, toward more socialism? In the last analysis, in my judgment, it is personal unrighteousness. When people do not use their freedoms responsibly and righteously, they will gradually lose these freedoms.

Let me illustrate: If I, as an employer, in my policies and practices exploit my employees, I will either lose them and my business, or my employees will gather together and threaten to strike me. They will strive to exercise an influence on the legislative process so that laws will be enacted dictating fair employment policies and practices, thus limiting my freedom to determine these things for myself.

If man will not recognize the inequalities around him and voluntarily, through the gospel plan, come to the aid of his brother, as outlined by Brother Romney, he will find that through “a democratic process” he will be forced to come to the aid of his brother. The government will take from the “haves” and give to the “have nots.” Both have lost their freedom. Those who “have,” lost their freedom to give voluntarily of their own free will and in the way they desire. Those who “have not” lost their freedom because they did not earn what they received. They got “something for nothing,” and they will neither appreciate the gift nor the giver of the gift.”

When you read the entire talk in context, Elder Hunter’s meaning becomes more clear, and it is in many ways the exact opposite of what you claim it is.

Michael Towns, as I say, for the modern liberal “outrage,” snarkiness and sarcasm have replaced logic. John F is not a typical liberal but has spent so much time around them that he is adopting their tactics, which is really quite unfortunate.

I am sincere about the question. Being accused of being angry gets old. It’s a trite attempt to deflect the conversation.

Dear Liberals: stop accusing us of anger, hate, vitriol and please use your vaunted brains to convince us that we’re wrong without suggesting that we are raging like Achilles after the death of Patroclus.

I absolutely loved this article and agree with it completely. A couple of comments:

First, if you take a careful look at any employer/employee contractual relationship, you will notice that it is the EMPLOYER who values the employees time more than the employee does. Don’t see it? Well, first you have to understand the nature of any free exchange, and, as Geoff stated in the article, barring slavery, it is a voluntary, free exchange of labor for money. In any free exchange, the people exchanging always trade something they value for something they value MORE. This is true every time or the exchange wouldn’t take place. If I trade $1 for a candy bar, barring any deception, I have shown that I value the candy bar more than the dollar.

The same goes with employment. If I am willing to trade an hour of my time for $5, I clearly value my time less than the $5. How much less, we don’t know, but we do know that it’s less. The employer, on the other hand, clearly values the employees hour more than he does the $5. We don’t know how much more than $5 he values that hour, but we know he values it more because he made the trade. So, clearly the employer values the employees time MORE than the employee himself does, or he wouldn’t make the trade and he would find employment elsewhere or do something else with his time that he values more.

Second, one of the most eye-opening scriptures I’ve ever read on this theme is the parable of the laborers in the New Testament:

1 For the kingdom of heaven is like unto a man that is an householder, which went out early in the morning to hire labourers into his vineyard.

2 And when he had agreed with the labourers for a penny a day, he sent them into his vineyard.

3 And he went out about the third hour, and saw others standing idle in the marketplace,

4 And said unto them; Go ye also into the vineyard, and whatsoever is right I will give you. And they went their way.

5 Again he went out about the sixth and ninth hour, and did likewise.

6 And about the eleventh hour he went out, and found others standing idle, and saith unto them, Why stand ye here all the day idle?

7 They say unto him, Because no man hath hired us. He saith unto them, Go ye also into the vineyard; and whatsoever is right, that shall ye receive.

8 So when even was come, the lord of the vineyard saith unto his steward, Call the labourers, and give them their hire, beginning from the last unto the first.

9 And when they came that were hired about the eleventh hour, they received every man a penny.

10 But when the first came, they supposed that they should have received more; and they likewise received every man a penny.

11 And when they had received it, they murmured against the goodman of the house,

12 Saying, These last have wrought but one hour, and thou hast made them equal unto us, which have borne the burden and heat of the day.

13 But he answered one of them, and said, Friend, I do thee no wrong: didst not thou agree with me for a penny?

14 Take that thine is, and go thy way: I will give unto this last, even as unto thee.

15 Is it not lawful for me to do what I will with mine own? Is thine eye evil, because I am good?

The attitude of the first labourers seems to mirror so many people in the world today. They are either unable or unwilling to take responsibility for their own choices in employment (and in other instances) and want to shift the blame for their choice onto someone else, usually their employer. And not only that, they want to stick their noses into other people’s business and get the government to force employees at the point of a gun to do what in their minds is ‘fair’. It is absolutely none of their business what I choose to trade my time for. What if I want to trade my time voluntarily for less than the minimum wage? Sorry, I can’t do that. Ignorant busybodies have eliminated my freedom to negotiate my own wage.

Another example of the attitude of someone who is unable or unwilling to take responsibility for their choices can be seen in this:

Let’s say you go into R.C. Willey because you want to buy a new sofa. You see a sofa you really like and the price is $800, on sale from $1600! You say to yourself, ‘Sweet!’ and you buy it. You bring it home and call up a friend and tell them to come over and see the sweet sofa you just bought for half price! Your friend comes over, sees the sofa and says, ‘Man! I gotta get in on this deal!’ So your friend goes to R.C. Willey the next day and for some reason or other, this same sofa is now on sale for only $400. Your friend buys it and then calls you up and says, guess what? I just bought that same sofa for only $400! What happens to your attitude, which moments before was one of elation at having gotten such a great deal? You feel ripped off. You want to call the store and chew them out for not giving you the same deal. If they won’t, you want the government to step in and make it ‘right’.

There are real world examples of this kind of thing happening all the time. Remember the i-phone ‘scandal’? People were so excited when they first came out that they ran out and bought them at the original retail price of $800, I think. Then a couple short months later, the price was dropped significantly and many of those people who had bought at $800, and were completely happy with their purchase until the price dropped, got very angry and basically threw a tantrum.

This busybody mentality of wanting to become involved in every so-called ‘injustice’ we see in the world, this attitude of not wanting to be responsible for our own choices, has lead to more and more government intrusion into our lives, and less and less freedom. I wish that we could, as a people, stop acting like petulant children when these kinds of things happen.

Again, in case their are any people out their who want to bring this up, I’m not talking about actual deception, coersion, or fraud. I’m talking about the freedom of one person to freely trade with another without someone else getting themselves involved, especially with the use of force.

Geoff, by your endorsement of the methods used for the improvement of the economic condition of the American Worker between 1880 and 1930, I suppose that you wholeheartedly endorse the principle of organized labor?

Geoff, Elder Hunter’s talk support my initial comment on this thread. To summarize, Elder Hunter theorized that the fault for the perceived need for and rise of Socialism can be ascribed to the personal unrighteousness of “employers” who exploit their “employees” in contravention of prophetic teachings such as those in Malachi quoted by John M. and injunctions repeated throughout the Book of Mormon and Doctrine & Covenants.

If you’re looking for examples to counter the bad actors like Walmart, take Costco as a good example. The CEO reportedly makes less than $500K per year and the employees earn living wages and get appropriate benefits, not minimum wages with no benefits. He is “putting his money where his mouth is” as you so often like to demand and though it isn’t making potential underwriters on Wall Street happy in the slightest, he is setting a great example.

I’m not sure we can be quite so one sided in blaming employers. You will notice that Elder Hunted outlined two possible results of treating employees unfairly. The first is that the workers would leave the business. The second is that they would force the government to fix their problem for them.

So yes, employers have a choice and responsibility in how they treat their employees. But mistreated employees also have a choice in how they react. Do they take personal responsibility for their career by negotiating with their boss or seeking out new work? Or do they abdicate their responsibility to the government and demand someone else fixes their problems for them?

Yes, management can mistreat employees. But only the employees can decide to escalate the issue instead instead of walking away and letting the company die.

John F, I reject the idea that Walmart is a “bad actor” (again, that judgement thing you seem to have). Nobody at Walmart is forced to take a job there. They can quit and leave anytime they want. I know fair amount of people who work or have worked at Walmart, and they enjoy their jobs and enjoy the company. If Costco wants to pay more, great for them. I would agree that there are times that it makes sense to pay more — you might reduce turnover, have happier employees, etc. But you gotta quit with the judgmental stuff.

I have already shown that “oppress” is not a correct translation for Malachi 3:5 in modern language. “Defraud” is more appropriate, and I have already said I agree that defrauding employees is bad and should be illegal. I give up on discussing Elder Hunter’s talk with you. You have decided to ignore 95 percent of it so you can concentrate on 5 percent of it, and life is too short to spend time on such a discussion under such circumstances.

Jay S, yes, people should be able to *voluntarily* gather together to ask their employer for better working conditions. If the employer refuses, these people can *voluntarily* decide to strike and encourage other employees to join the strike.

I have no problem with labor doing this, but I would note a)this is not usually how union thugs act and b)there are many cases when people do not want to join the union and they should not be forced to do so and c)history shows many employers voluntarily decide, for their own reasons, to offer better pay and benefits (witness Ford).

Geoff, the variation of translation between the KJV and NIV of that word in Malachi is a lot to hang your ethical hat on, especially in light of the cumulative weight of religio-ethical admonitions in the Book of Mormon and the Doctrine & Covenants.

Michael, it sounds like you feel confident in labelling anyone who doesn’t agree with you about the supposed benefits of eliminating the minimum wage as a liberal (which you apparently view as a derisive label).

John F, (sigh). Like Elder Hunter’s talk, which you ignore 95 percent of, the scriptures say, in the clearest language possible, that we should *voluntarily help the poor*. The scriptures do not say that it is a positive thing for companies to go out of business paying their employees above-market wages. In the latter case, the result very well may be that the poor employee goes from having a job to being unemployed. I see that as a net negative. As I say, if you think it is so easy, go start your own business and pay twice the prevailing wages, and let’s see how long you last in business. It is true that some companies may, for a variety of reasons, decide to pay higher wages, just as Costco did and just as Henry Ford did. At the end of the day the only way these companies will stay in business is *if it is a wise business decision.* I repeat, but this is apparently difficult to understand: margins are thin for most businesses. As Chris says above, a demand shift can shut down a small business in a few months. It is not good for the employee or the employer for the employer to pay wages that cause him to go out of business, and *the scriptures are completely silent on this issue except for the many admonitions for people to be prudent in Proverbs, for example.*

I don’t think the scriptures, especially the D&C, are silent about this. But it is a problem that so many Mormons seem to think so. A fair reading of both individual, proof-texted verses out of the D&C and the book taken cumulatively could be that it is morally wrong for someone to be making millions but paying his or her workers $7.25/hour with no benefits. Obviously, you would take issue with that reading and argue against it. But it is not an absurd suggestion and Mormons who do not happen to think that Econ 101 — or lionized von Mises — trumps morals/ethics/religious duties are not doing so in bad faith. And Elder Hunter is not out of line in pointing a finger of judgment and identifying personal unrighteousness of those who covet their own wealth as a source of the problems we face and an obstacle to establishing Zion.

A large number of people who own their own business aren’t making millions, living in McMansions and boating on their weekends. For business owners with extremely slim profit margins, minimum wage might be all that they can afford. They are obviously not morally culpable for withholding more from their employees than they can give. It does not follow, however, that the minimum wage is immoral. The reason we have it is because employers have shown themselves in the past not to give proper regard to the welfare of their employees and so this minimal effort at regulation has been seen as necessary. (Again, returning to Elder Hunter, he seems to place blame for this on the personal unrighteousness of employers who in the past have “oppressed” their workers of their hired wages.)

Each business owner will have to decide for him or herself what is the morally right amount of income to take away from a business in relation to how much the employees are being paid. The growing gap between rich and poor in this country implies that this particular moral compass might be in need of repair at this time. Does it signal that we are tilting again to the attitudes of entitlement to gain and wealth that animated the generations of the robber barons?

Apparently thinking about these things — and not jumping on board with your opinions about the minimum wage or other regulatory measures protecting labor — makes me judgmental. In fact, you’ve accused me several times in the comments above of calling your righteousness into question, though such accusations are baseless.

John F, I don’t own a business right now, so my personal righteousness is not at stake and I never said it was. However, you have repeatedly been judgmental of people who don’t run their businesses the way you think they should. Go up the comments and take a look at your language: “unrighteousness,” “unscrupulous,” “bad actor.” Yes, this is being judgmental. Again, I have two suggestions for you: 1)start your own business and pay above-market wages. 2)Go into McDonalds, Walmart, etc and start handing out money. Otherwise, just assume that most people try to do the best they can under often-difficult circumstances, including businesspeople and even — I know this is hard to believe — lawyers.

However, I will (hopefully end) this conversation on a positive note because I appear to have reached you a little bit. I will glory in this sentence: “Each business owner will have to decide for him or herself what is the morally right amount of income to take away from a business in relation to how much the employees are being paid.”

Can you conceptually understand that if a business is told to hire people at a higher wage, then they must choose how to absorb the higher cost of doing business, and that sometimes results in people being let go of their jobs?

This happens all the time. Minimum wage hurts real people. It does exactly the opposite of what is intended. Numerous are the studies that confirm this.

Real wages in the US have been stagnant since the 1970s. The share of national income representing returns on capital has grown fantastically while the returns on labor have declined. These are the real economic problems underlying the minimum wage debate. The evidence for these problems are the debt and housing bubbles that propped up the middle class, the current near-deflationary economy, and rising budget deficits as the government must increasingly support the whole house of cards.

As a liberal, I can agree with the libertarians on here that direct wage controls are blunt and inefficient tools to address these problems. However, in the current environment it is unconscionable to advocate policies that would further depress labor’s share of national income. Unless you want the whole thing to finally collapse.

The breezy way in which America’s staggering number of poor folks are assumed to contract “freely” for their labor betrays a staggering ignorance of human nature and markets in general.

“The breezy way in which America’s staggering number of poor folks are assumed to contract “freely” for their labor betrays a staggering ignorance of human nature and markets in general.”

So they contract against their own choice and free will? They are forced to put in applications at McDonald’s?

I agree with you about the debt and monetary bubbles. Those are the direct results of a Federal Reserve and corrupt statist politicians, not any fundamental flaw in the free market system. We haven’t had a free market in the US in about a hundred years.

While it is true that a business owner has the right to pay whatever they want to (as long as it’s legal)… it’s also true that some fast food owners pay a lot. Dick’s is a chain in the Seattle area that provides full medical, high salary (approahcing $30/hour for longer term employees — last time I checked 10 years ago), and FULL RIDE SCHOLARSHIP to any university the employee wants to go to. But like all companies that pay well, they also are very careful about who they hire and expect employees to be great. I don’t know if it’s still true, but in the 90s all of their employees needed to be able to accurately compute each order’s exact price, including taxes off the top of their head.